When a mortgage loan is closed, the origination file is closed and a servicing file is opened. It remains open for the life of the loan. Whether the process goes smoothly or badly depends on the servicing agent. The servicing agent is the entity that receives the mortgage payment, keeps the payment records, provides borrowers with account statements, imposes late charges when the payment is late, and pursues delinquent borrowers.In many transactions, servicing agents also pay property taxes and insurance with money placed in escrow by the borrower. Borrowers can choose from whom they borrow, but they can’t choose the servicing agent.

Why conduct a Loan Servicing Review?

The servicing agent may or may not be the lender who originated the loan and the loan servicing is frequently sold. Borrowers must be notified that their loan servicing has been transferred, but cannot prevent it. Unfortunately, during the course of servicing the average residential home loan, hundreds of transactions take place and errors are commonplace. In some cases this type of financial negligence is obvious, but in most cases these errors go undetected by the homeowner. Its for this reason, that many attorneys consider conducting servicing review. 

Prior to concluding a loan modification, or a settlement in a foreclosure action, attorneys will generally conduct an ARM Audit and an Escrow Audit, that review the two key areas prone to financial negligence on the part of the servicing agent: (i) erroneous ARM adjustments, often resulting in significant overpayments by the client, and; (ii) mismanagement of the homeowner's escrow account, often resulting in a dangerous underfunding condition or unnecessary overbilling.

Forensic Accounting

AmStar's forensic accounting team is composed of accountants, financial analysts and former compliance officers that work under the supervision of the client law firm to assist in the preparation of a comprehensive financial review that will detect ARM and Escrow overcharges. As a part of this process, your law firm will work with our team to review disclosure documents, statements, servicing history, homeowner correspondence and compare the servicing practices applied to your client's file against those required under the loan documents and/or mandated by federal, state or local law.  The resulting work product is a comprehensive financial report that will allow you to close the loan modification or settle the foreclosure action with confidence that your client's rights have been fully protected.

If you would like to learn more about Amstar's Forensic Loan Auditing Services, contact us toll-free at
877-550-5878, drop us an e-mail at sales@amstarlit.com, or order now.